In a nutshell...

Kerabu is a work in progress. So far there's a business plan, a blog and a draft of a book--all of which are about promoting a form of radical entrepreneurialism that is lucid, ecstatic and even sensual. (None too subtle, but that's why the blog is pretty and floaty--too many business blogs are IBM blue). My name is Hillary Johnson, and I'm the author of some books and a contributor to some other blogs (below), and sometimes write about business, entrepreneurialism and innovation for magazines like Inc.

May 04, 2006

Why five goods still don't equal a great

I was consulting to a development manager at a tech company. He told me that the CEO, his boss, wouldn’t give him the salary and option freedom he needed to close a great programmer he’d found. Salary would have been 20% above what he had approval to offer; and, thanks to the new accounting standards for stock options, he didn’t have the authority to offer options. He lost the potential new hire and had to settle for someone merely “good”. Ironic thing is that he had several open positions so, once he gets through hiring several people, he’ll end up paying more in the aggregate than he would have paid for the superstar – and probably won’t get as much productivity.

Why do we persist in evaluating productivity as if the only model for productivity is the assembly line? Creative work is anything but incremental--it's in fact inherently exponential. If Einstein could accomplish a civilization's worth of "work" in a single calendar year (1905, while he was "working," incidentally, as a patent examiner), why don't we recognize that it's more efficient to value productivity on the content of the contribution alone?

Curiously, the only "jobs" now valued in this way are top-level executive positions, where the results are indeed measurable in company earnings, and where all measurements indicate that an investment in higher salaries has no positive effect.

Shouldn't it be the other way around? Let executives "earn" their salaries in the form of a profit share, but make capital investments in talent.

Comments

Yes, you're right. The notion of a *job* in many areas still carries the quaint holdover notion of a linear sequence of supervisable tasks, whilst in (increasingly) reality, the moment of real contribution can come in many places or at any time, based on what has gone before in an interonnected series of feedback loops, connections and relationships.

Ad yes, especially at the executive level, pay should be related almost only to performance, with a (much lower) base level of salary ... and should reflect real levels of current performance, not performance as voted onby a compensation committee staffed by cronies. Capital in the form of investment in salaries should be allocated to productive talent at lower levels.